

			Receiving Regulatory Treatment
	Remaining Amortization Period		(1) Earning A Return		Not Earning A Return		(2) Expected Recovery or Refund		Total 2017		Total 2016
Regulatory Assets:
Investment in exchange power-net	2019		$	4,083	$	—	$	—	$	4,083	$	6,533
Regulatory assets for deferred income tax	(3	)	90,315				—		90,315		109,853
Regulatory assets for pensions and other postretirement benefit plans	(4	)	—		209,115		—		209,115		240,114
Current regulatory asset for energy commodity derivatives	(5	)	—		24,991		—		24,991		11,365
Unamortized debt repurchase costs	(6	)	11,880		—		—		11,880		13,700
Regulatory asset for settlement with Coeur d’Alene Tribe	2059		43,954		—		—		43,954		45,265
Demand side management programs	(3	)	—		24,620		—		24,620		15,700
Decoupling surcharge	2019		22,359		—		—		22,359		43,126
Regulatory asset for utility plant to be abandoned	(7	)	24,330		—		—		24,330		19,100
Regulatory asset for interest rate swaps	(8	)	53,797		—		115,907		169,704		161,508
Non-current regulatory asset for energy commodity derivatives	(5	)	—		18,967		—		18,967		16,919
Other regulatory assets	(3	)	8,212		7,064		4,555		19,831		16,645
Total regulatory assets			$	258,930	$	284,757	$	120,462	$	664,149	$	699,828
Regulatory Liabilities:
Natural gas deferrals	(3	)	$	37,474	$	—	$	—	$	37,474	$	30,820
Power deferrals	(3	)	29,873		—		—		29,873		23,528
Regulatory liability for utility plant retirement costs	(9	)	285,786		—		—		285,786		273,983
Income tax related liabilities	(3) (10)		—		18,223		442,319		460,542		28,966
Regulatory liability for interest rate swaps	(8	)	11,257		—		7,381		18,638		21,191
Provision for earnings sharing rebate	(3	)	—		2,350		3,420		5,770		10,297
Decoupling rebate	2019		5,816		—		—		5,816		2,405
Other regulatory liabilities	(3	)	1,926		2,528		—		4,454		5,762
Total regulatory liabilities			$	372,132	$	23,101	$	453,120	$	848,353	$	396,952


(1)	Earning a return includes either interest on the regulatory asset/liability or a return on the investment as a component of rate base at the allowed rate of return.


(2)	Expected recovery is pending regulatory treatment including regulatory assets and liabilities with prior regulatory precedence.


(3)	Remaining amortization period varies depending on timing of underlying transactions.


(4)	As the Company has historically recovered and currently recovers its pension and other postretirement benefit costs related to its regulated operations in retail rates, the Company records a regulatory asset for that portion of its pension and other postretirement benefit funding deficiency.

(5)

The WUTC and the IPUC issued accounting orders authorizing Avista Corp. to offset energy commodity derivative assets or liabilities with a regulatory asset or liability. This accounting treatment is intended to defer the recognition of mark-to-market gains and losses on energy commodity transactions until the period of delivery. Realized benefits and losses result in adjustments to retail rates through purchased gas cost adjustments, the ERM in Washington, the PCA mechanism in Idaho, and periodic general rates cases. The resulting regulatory assets have been concluded to be probable of recovery through future rates.

(6)

For the Company’s Washington jurisdiction and for any debt repurchases beginning in 2007 in all jurisdictions, premiums paid to repurchase debt are amortized over the remaining life of the original debt that was repurchased or, if new debt is issued in connection with the repurchase, these costs are amortized over the life of the new debt. In the Company’s other regulatory jurisdictions, premiums paid to repurchase debt prior to 2007 are being amortized over the average remaining maturity of outstanding debt when no new debt was issued in connection with the debt repurchase. These costs are recovered through retail rates as a component of interest expense.

(7)

In March 2016, the WUTC granted the Company's Petition for an Accounting Order to defer and include in a regulatory asset the undepreciated value of its existing Washington electric meters and natural gas ERTs for the opportunity for later recovery. This accounting treatment is related to the Company's plan to replace approximately 253,000 of its existing electric meters with new two-way digital meters and the related software and support services through its AMI project in Washington State. Replacement of the meters is expected to begin in the second half of 2018.

(8)

For interest rate swap derivatives, Avista Corp. records all mark-to-market gains and losses in each accounting period as assets and liabilities and records offsetting regulatory assets and liabilities, such that there is no income statement impact. The interest rate swap derivatives are risk management tools similar to energy commodity derivatives. Upon settlement of interest rate swap derivatives, the regulatory asset or liability is amortized as a component of interest expense over the term of the associated debt. The Company records an offset of interest rate swap derivative assets and liabilities with regulatory assets and liabilities, based on the prior practice of the commissions to provide recovery through the ratemaking process. Settled interest rate swap derivatives which have been through a general rate case proceeding are classified as earning a return in the table above, whereas all unsettled interest rate swap derivatives and settled interest rate swap derivatives which have not been included in a general rate case are classified as expected recovery. See below for additional information regarding the Company's 2016 settled interest rate swaps in the Washington general rate cases. The Idaho and Oregon portion of the 2016 settled interest rate swaps are included in earning a return because they were approved for recovery in those respective states.


(9)	This amount is dependent upon the cost of removal of underlying utility plant assets and the life of utility plant.

(10)

The amount pending recovery represents amounts due back to customers and resulted from the new federal income tax law and changing the federal income tax rate from 35 percent to 21 percent and revaluing all deferred income taxes as of December 31, 2017. The Company currently expects the amounts for utility plant items for Avista Utilities to be returned to customers over a period of approximately 36 years using the ARAM. The Company expects the AEL&P amounts to be returned to customers over a period of approximately 40 years. The Company does not currently have an estimate for non-plant items included in this balance as the Company is waiting for additional implementation guidance from various regulatory agencies. In addition, none of the excess deferred tax amounts have been through a regulatory proceeding as of this filing; therefore, a definitive amortization period has not been established. See Note 11 for additional discussion regarding the new federal income tax law.